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Catalan Vote May Highlight Pressure for Split From Spain

Catalan President Artur Mas
Catalan president Artur Mas speaks to supporters during a CiU party meeting in Tarragona. Photographer: Stefano Buonamici/Bloomberg

Voters in Catalonia head to the polls in two days in a regional election likely to advance nationalists’ push for independence and weaken Spanish Prime Minister Mariano Rajoy.

Catalans are set to hand nationalist parties control of the 135-seat regional parliament, setting them on a collision course with Rajoy’s government in Madrid, polls show. Regional President Artur Mas, who’s pledged to hold a referendum on independence that Rajoy says would be illegal, had the support of 37 percent of voters and the Catalan Republican Left was at 12 percent, in a Metroscopia poll this month.

“The Catalan government is likely to push for a legal referendum to be held within the next two years,” Antonio Barroso, a political analyst at Eurasia in London and a former Spanish government pollster, said in a Nov. 20 research note. Mas “cannot backtrack once he is reelected.”

Mas’s ambition to lead the 7.5 million Catalans out of Spain poses a constitutional crisis to Rajoy, who may be forced to relinquish some sovereignty in exchange for an international bailout. Rajoy says he’ll block any referendum Mas holds because it would be unconstitutional.

“I won’t abandon it,” Mas said in a Nov. 19 radio interview. If there’s a majority of pro-independence lawmakers from his party and others in the regional assembly, “it would be fraud” to ditch the planned vote.

Seat Breakdown

Mas may claim 62 deputies in the chamber, unchanged from its current tally. Rajoy’s People’s Party may overtake the Socialists to get 19, the second most, as it attracts voters who favor remaining part of Spain, according to Metroscopia’s poll of 2,500 voters conducted from Nov. 8 to Nov. 15. The margin of error was 2.5 percentage points.

Hanging over the election is Rajoy’s broader struggle to restart the Spanish economy while reining in public borrowing that is set to jump by 17 percentage points this year to 85 percent of gross domestic product as the state absorbs to the cost of bailing out the banks, the power system, construction firms and regional governments. Unemployment reached a record 26 percent in September bringing Spaniards onto the streets in a wave of protests against the government.

Mas has added his voice to those of the European officials urging Rajoy to request aid from the EU and lower borrowing costs for Spanish companies. Rajoy says he’s still considering whether a bailout would be in Spain’s best interest.

Bailout Seen

“Following the Catalan elections, we think Spain will be more likely to enter an EU/IMF program,” Alberto Gallo, head of European macro credit research at Royal Bank of Scotland Group Plc in London, said in a Nov. 19 research note.

The deterioration in Catalonia’s public finances helped push Mas toward calling early elections. About 1.5 million rallied for independence on Sept. 11, according to Catalan officials. The protest came after Mas was forced to ask Rajoy for a 5 billion-euro $6.5 billion) bailout as he struggled to cover his utility bills or pay cleaners and security guards.

Catalan bills maturing in April yielded 8.7 percent yesterday, down from 17.3 percent in August before the bailout request. The region’s 2018 notes yielded 10.3 percent, compared with the sovereign’s 4.78 percent.

Mas, who rejected the limits Rajoy demanded on regional deficits next year, argues that his region is being dragged down by poorer regions in Spain that receive 15 billion euros a year in transfers from taxes paid in Catalonia. He says Catalans will be better off outside of Spain.

‘Against History’

“This proposal goes against history, it goes against the zeitgeist and it goes against common sense,” Rajoy said in a Nov. 6 radio interview. “In a move like this, we all lose.”

The 7.5 million Catalans make up 16 percent of the Spanish population and last year contributed 19 percent of the country’s economic output. Madrid is the second-biggest regional economy, with its 6.5 million inhabitants producing 18 percent of national output.

“Between Catalonia and Spain there’s a feeling of fatigue,” Mas told an audience of business leaders and government officials in Madrid on Sept. 13. “Catalonia is tired of not being able to develop as it feels it should within the Spanish state.”

The biggest obstacle to Catalan independence may come from the European Union, which may also have to take a stance on a split in the U.K. after Scots vote on independence in 2014. A new state would have to reapply to join the 27-nation EU, Competition Commissioner Joaquin Almunia said this month.

‘Absolutely Impossible’

“If within the process we reach the conclusion that it would be absolutely impossible” to stay in the EU “then we will rethink,” Mas he added Nov. 7.

To avoid a showdown, the leaders may seek a deal that lets Catalonia keep a greater share of its tax revenue, allowing Mas to claim he’s increased the region’s autonomy without Rajoy having to confront the breakup of his country, Barroso said.

“The lines within the PP seem to be slowly moving toward favoring a deal that would give more resources to Catalonia in order to defuse the current tensions,” he wrote. “That will not solve the long-term issue of Catalonia’s status but it at least will delay the issue of independence for some time.”

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